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(Sharecast News) - Superdry will have a problem with its wholesale sales in its new financial year, Stifel predicted as it downgraded the faux-Japanese fashion chain.
Superdry said this week that inventory will be higher by the end of the year because of unsold autumn/winter season clothes.
In a note to clients on Friday, Stifel analysts predicted the 2020 financial year will be hit as there will be surplus stock to clear, adding to the FTSE 250 group's attempts to rejuvenate the brand.
"Management says product improvements are unlikely until autumn-winter 2019 at the earliest. This looks distant given negative earnings momentum."
Even though the shares trade at an undemanding 8.4 times 2019 earnings on current consensus estimates, the analysts think the uncertainty means "the time required to turn around the brand and related execution risk require a deeper discount to the sector".
They downgraded the rating to 'sell' from 'hold' with a 460p price target
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